Bitcoin
Transaction Fees To The Rescue! Bitcoin Miners Find Solace In Network Activity
For years, Bitcoin miners have toiled away, fueled by the promise of block rewards – newly minted coins earned for validating transactions. But a recent trend is changing the game, with transaction fees quietly usurping block rewards as the primary source of miner income. This shift, while unexpected, presents both opportunities and challenges for the future of Bitcoin.
Bitcoin: Transaction Fees On The Rise
Ki Young Ju, CEO of cryptocurrency analysis firm CryptoQuant, recently highlighted a significant change in the Bitcoin mining landscape. Transaction fees, once a minor contributor to miner income, have seen a dramatic rise. According to CryptoQuant’s data, transaction fees now account for over 7% of miners’ total income, a stark contrast to the meager 1% reported just two years ago.
Building apps on #Bitcoin has significantly changed miners’ income streams.
Transaction fees now account for over 7% of their total revenue, up from 1% two years ago.
This trend has persisted for the last four weeks and could potentially strengthen the network’s fundamentals. pic.twitter.com/YVbdmLXB5c
— Ki Young Ju (@ki_young_ju) May 7, 2024
A Boon For Network Stability?
This surge in transaction fees isn’t just about boosting miner profits; it has the potential to significantly impact the overall health of the BTC network. The increasing number of applications built on the Bitcoin blockchain translates to more transactions and, consequently, higher fee revenue for miners.
This, in turn, could incentivize continued mining activity even as block rewards get halved roughly every four years – a pre-programmed mechanism designed to control the total supply of Bitcoin.
BTC market cap currently at $1.23 billion. Chart: TradingView.com
The Double-Edged Sword Of Fees
The rise of transaction fees presents a double-edged sword for Bitcoin. While it offers miners a more sustainable income stream and potentially strengthens network security, it also raises concerns about transaction speed and user experience.
As miners prioritize maximizing profits, they might be tempted to favor transactions with higher fees, leading to slower processing times for regular users and potentially driving up overall transaction costs.
BTCUSD price action in the last seven days. Source: CoinMarketCap
A Ripple Effect Across The Ecosystem
The changing dynamics of crypto mining extend beyond just miners. A fee-driven network could have a ripple effect across the entire Bitcoin ecosystem. Investors and users might need to adjust their strategies as transaction costs fluctuate. The valuation of the crypto asset itself could also be impacted, with increased fees potentially deterring new users from entering the market.
Navigating The New Frontier
The rise of transaction fees marks a new frontier for Bitcoin. While it presents exciting possibilities for miner profitability and network stability, it also necessitates careful consideration of potential drawbacks.
Finding the right balance between miner incentives and user experience will be crucial for Bitcoin’s continued success. Stakeholders across the ecosystem, from miners and developers to investors and users, will need to adapt and innovate to ensure a future for Bitcoin that is secure, efficient, and accessible to all.
Featured image from Futuros Abrelatam, chart from TradingView
Bitcoin
Bitcoin Price And Satoshimeter: Analyst Says $100,000 Is Far From The Peak
The Bitcoin price rally towards the $100,000 mark is the talk of the crypto industry. Notably, the Bitcoin price has reached new all-time highs for four consecutive days on the path to this $100,000 price level, with the latest being an intraday high of $99,645 in the past 24 hours.
Interestingly, the ongoing bullish sentiment suggests this rally is far from over. According to one crypto (Stockmoney Lizards), Bitcoin is still in the middle of its projected peak this cycle, and the current pump is just one phase of a larger upward trajectory.
Satoshimeter Says Bitcoin Price Still Has A Long Way To Go
The Satoshimeter is a technical analysis tool developed by Stockmoney Lizards. The Satoshimeter uses on-chain data to monitor Bitcoin’s market cycles and has been relatively good in predicting market peaks and lows. For instance, readings around 1.6 typically mark the low points of bear markets, as seen in years like 2011, 2015, 2019, and 2022. On the other hand, the peaks of bull markets are highlighted by readings above 20 on the Satoshimeter.
The Bitcoin price rally has witnessed a notable surge since the beginning of the year and is showing no signs of stopping anytime soon. Particularly, the Bitcoin price is up by 163% in the past 12 months, according to Coinmarketcap data. Despite Bitcoin’s ongoing rally, the Satoshimeter currently sits in a mid-range area, suggesting that the cryptocurrency has substantial room for growth before reaching a cycle peak.
Stockmoney Lizards emphasized that while the recent price surge might see short-term corrections, these are part of a healthy market trajectory. This implies that the Bitcoin price could see periodic pullbacks as it consolidates gains, but the Bitcoin price at $100,000 is definitely not the peak for this cycle.
Long Road Ahead For BTC Price
A final break above $100,000 would undoubtedly be a major milestone for the Bitcoin price history. However, the current market sentiment suggests it would only be the first step of many milestones to hit this bull cycle. For instance, crypto analyst Stockmoney Lizards projected in another analysis that the Bitcoin price is about to enter a second parabolic run that would see it surging past the $120,000 price mark by April 2025.
Although this price target is very bullish, it pales in comparison to projections from other crypto analysts. PlanB, the creator of the popular Stock-to-Flow (S2F) model, has put forth an even more ambitious target. He suggests that Bitcoin could reach trade for as high as $1,000,000 by December 2025. Despite these ambitious targets, caution is warranted, particularly as Bitcoin appears to be approaching an overheated zone on the MVRV ratio indicator.
At the time of writing, Bitcoin is trading at $98,550.
Featured image created with Dall.E, chart from Tradingview.com
Bitcoin
Bitcoin Price To $100,000? Here’s What To Expect If BTC Makes History
Following the events of the past week, it is more of a matter of “when” rather than of “if” the Bitcoin price will hit a historic six-figure value. The crypto commentary channels and waves have been largely occupied with the premier cryptocurrency potentially reaching $100,000 over the last few weeks.
A six-figure value for BTC is not only an impressive milestone for the entire crypto industry but also one that comes with “unfavorable” events such as liquidations for short traders. Here is an on-chain insight into “what next” if the Bitcoin price climbs above $100,000.
What’s Next For BTC’s Price After $100,000?
In a recent report, blockchain analytics firm Glassnode shared an insight into the on-chain performance of the premier cryptocurrency since starting its latest rally. While the $100,000 price mark seems inevitable, the blockchain firm expects Bitcoin price to lose some of its momentum after crossing the target.
One of the rationales behind this projection lies in the recent behavior of an investor cohort known as the Long-term holders (LTH). According to Glassnode, the long-term holders are beginning to offload their assets for profits and may be waiting to sell more coins as the price action continues to grow strong.
Source: Glassnode/X
Based on data from the LTH Spending Binary Indicator, which tracks the intensity of the sell-side pressure of the long-term holders, these major investors have been increasingly distributing their assets. This Spending Binary metric shows that the LTH balance has declined on 11 of the last 15 days.
While the demand from institutional investors, specifically via the US spot exchange-traded funds (ETFs), has absorbed 90% of the sell-side pressure from long-term investors, Glassnode noted that the spending pressure of this investor cohort has begun to outpace ETF net inflows in recent days. This pattern was also noticed earlier in February 2024.
According to Glassnode, if the sell-side pressure continues to outpace the ETF demand, it could result in short-term price volatility or lead to price consolidation. The on-chain firm said:
However, since 13 November, LTH sell-side pressure has begun to outpace ETF net inflows, echoing a pattern observed in late February 2024, where the imbalance between supply and demand led to increased market volatility, and consolidation.
$1.89 Billion To Be Liquidated If Bitcoin Price Crosses This Level
In a November 22 post on X, prominent crypto analyst Ali Martinez sounded a warning to the Bitcoin bears. According to data from CoinGlass, a massive $1.89 billion looks set for liquidation if the Bitcoin price hits $100,625.
Source: Ali_charts/X
As of this writing, the premier cryptocurrency is valued at $99,424, reflecting a 1.4% price increase in the past day. Data from CoinGecko shows that the Bitcoin price has been on a much more impressive run on the weekly timeframe, surging by nearly 10% in the past seven days.
The price of Bitcoin on the daily timeframe | Source: BTCUSDT chart on TradingView
Featured image from iStock, chart from TradingView
Bitcoin
Bitcoin’s Put-to-Call Ratio Tops 1.0: Bearish Signs Ahead?
Crypto markets will witness $3.42 billion in Bitcoin and Ethereum options contracts expire today. The massive expiration could cause a short-term price impact, particularly as markets wait expectantly for Bitcoin to tag $100,000.
With Bitcoin options valued at $2.86 billion and Ethereum at $561.66 million, traders are bracing for potential volatility.
Unlike Ethereum, Traders Bet On Bitcoin Price Pullback
There has been a significant increase in Bitcoin (BTC) and Ethereum (ETH) contracts due for expiry today compared to last week. According to Deribit data, 28,905 Bitcoin options contracts will expire on Friday with a put-to-call ratio of 1.09 and a maximum pain point of $86,000.
On the other hand, 164,687 Ethereum contracts are due for expiry today, with a put-to-call ratio of 0.66 and a maximum pain point of $3,050.
Bitcoin’s Put-to-call ratio stands above 1, indicating a generally bearish sentiment despite BTC’s whales and long-term holders fueling its recent growth. In comparison, Ethereum counterparts have a put-to-call ratio of 0.66, reflecting a generally bullish market outlook.
The put-to-call ratio gauges market sentiment. Put options represent bets on price declines, whereas call options point to bets on price increases.
When this ratio is above 1, it suggests a lack of optimism in the market, with more traders betting on price decreases. On the other hand, a put-to-call ratio below 1 suggests optimism in the market, and more traders are betting on price increases.
Bitcoin’s Put-to-Call Ratio, Implications for BTC
As options near expiration, traders are betting on BTC prices dropping and ETH prices rising. According to the Max Pain Theory in options trading, BTC and ETH could each pull toward their maximum pain points (strike prices) of $86,000 and $3,050, respectively. Here, the largest number of contracts — both calls and puts — would expire worthless.
Notably, price pressure for both assets will ease after Deribit settles contracts at 08:00 UTC today. At the time of writing, however, BTC was trading for $98,876, whereas ETH was exchanging hands for $3,389. Meanwhile, in line with put-to-call ratios, analysts at Greeks.live anticipate an extended move north for ETH and say BTC is at the cusp of a correction.
“With about 8% of positions expiring this week, the big rally in Ethereum has led to a significant increase in ETH major term options IV [implied volatility], while BTC major term options IV has remained relatively stable. The market sentiment remains extremely optimistic at this point,” Greeks.live analysts said.
The analysts also note that while Bitcoin risks a correction, the generalized market rally keeps this potential pullback at bay. They ascribe the positive sentiment in the market to significant capital inflows into ETFs (exchange-traded funds), specifically BlackRock’s IBIT options, which started to trade only recently alongside a strongly driven spot bull market.
Nevertheless, with today’s high-volume expiration, traders should anticipate fluctuations in Bitcoin and Ethereum prices that could shape their short-term trends.
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